To be effective, modern inventory distribution systems require the ability to provide the right inventory at time and manner required by the customer. In traditional systems, inventory is stored by the seller delivered from the seller to the customer as needed. This provides the ability to deliver product to the customer as needed. Unfortunately, this type of inventory system also results in increased inventory carrying costs, including costs for inventory facilities, transaction costs, and the costs associated with money tied up in inventory. In some industries, the costs of carrying large amounts of inventory can be prohibitive.
In these industries a more effective model is one where the sellers inventory is minimized, while the seller maintains the ability to effectively deliver product to the buyer as needed. In such a system the supplier of the inventory continues to hold the product until it is ready to be shipped directly to the customer. While such systems are able to reduce inventory costs for the seller, they also introduce unwanted complexity into the transactions between buyers, sellers and suppliers.
Thus, what is needed is an improved system and method for managing inventory supplies, customer orders and transactions between buyers, sellers and outsource suppliers that delivers material specifically to the customer requirements, is traceable throughout the process and minimizes both human and inventory costs.